Tony Blair hesitated over standing for the Labour leadership, fearing it was such a big "psychological step" to reverse the party perception that Gordon Brown was "the main man", Alastair Campbell, Labour's former communications chief, reveals in the first unabridged volume of his diaries, Prelude to Power, serialised today.

Blair told Campbell in May 1994 in the wake of John Smith's death: "GB [Brown] had worked for this moment all his life and he was not going to step aside easily. I only want to do what is right."

He added later the same day: "I really don't want to fight Gordon. I don't think that would do anyone any good, not us and certainly not the party."

Campbell also recorded at the time that he thought Peter Mandelson was backing Brown after he told Campbell: "Do not imagine GB will just walk away from this. He is a formidable politician and he cannot be ruled out lightly in the way you did."

Once it became clear that Mandelson would back Blair, Mandelson admitted "Brown felt betrayed". In an effort to lessen the blow Blair fatefully asked Campbell to brief the media that there was a good chance due to their youth that Brown "would get the leadership at a later date", a half-promise that was to dog the two men's relationship for a decade in government.

Within less than a year the dysfunctional relationship between Blair, Brown and Mandelson that dogged Labour in opposition started to enrage the deputy leader, John Prescott.

According to Campbell on 14 March 1995, Prescott, one of the men who emerges best from the diaries, "really laid into GB – indecisive, not as clever as he thinks he is, not a team player, looking after himself. He said to TB: 'You've got a real guilt complex about him because you've got the job, and he plays at making you feel guilty, and the other one [Peter] wheedles about and makes you think you need him and it's like you have got two fucking monkeys on your back. They get their authority from you, and they abuse it. They damage you.' TB said: 'Look I am a politician, not a psychoanalyst.' "

Blair has been stalwart in refusing to criticise Brown in public, but according to Campbell concluded as early as February 1996 that GB "would not work with him properly", even though "TB insisted he 'worked like hell' to make the partnership work". He said: "It was like dealing with a girlfriend who every time you looked at another woman thought you were having an affair with them."

Campbell also discloses that Brown, as PM, tried to persuade him to become a government minister in the Lords in the same way as he had appointed Lord Mandelson. Campbell says he rejected the offer largely because he had made promises to his family not to return to full-time politics.

He also tells the Guardian: "I think it's obvious, throughout the book, that Gordon did have people around him who did make life quite difficult." He cites Charlie Whelan, Brown's then press secretary, and Nick Brown, a Labour MP and confidant. Asked if those people included Ed Balls, Campbell says: "Up to a point, yeah, I always got on perfectly well with Ed, on one level. But I did think, sometimes, there were too many of them saying to Gordon: 'We're just going to have to live with the fact that this other guy's in there, but he's not as good as you'd be.' "

Campbell was central to Labour's unlikely efforts to secure a fourth term, and says the campaign was undermined by the unwillingness of Brownites to make more of the total record of the Labour government. He points out when "Gordon took over from Tony, that was being defined as the change. A lot of the continuity was lost."

Campbell reveals that he is backing David Miliband for the Labour leadership. Asked what he thought of Balls's and Ed Miliband's expressed misgivings on Iraq he replied: "If it's a really, really profoundly and sincerely held view, then fine. If it's a bit of political positioning, I think it's a bit silly. Now, it may be the former. I've not heard it before."

When Alastair Campbell published The Blair Years in 2007, he withheld the most explosive material. But now, in an exclusive extract from his uncut diaries, he can at last be frank about Blair, Brown and the tensions at the top of New Labour